According to Harvard Business School Professor Karim Lakhani, who is also a Cutter Consortium Fellow, a new “hub economy” is emerging as a result of a shift in the business models companies are using to create and capture value. It’s now networks and data that are the organizing principles. The hub economy, writes Prof. Lakhani in a recent article for Cutter Business Technology Journal, is disrupting traditional businesses — from retail to automotive, hospitality to health, manufacturing to finance — all across the spectrum. This, in turn, is creating world in which just a small number of companies (think Amazon, Facebook, Google, etc.) dominate.

Why? Karim states:

The nature of competition in the hub economy … drives much of the change. While increasing its customer base offers traditional product and service firms clear advantage early on, this competitive advantage diminishes after a certain point, making ongoing competition possible. In contrast, platform businesses like Amazon and Google benefit from increasing returns as their user base grows. Moreover, successful hub economy firms can leverage their network-based strength to enter and win in new markets, as Amazon has demonstrated repeatedly.”

In Karim’s short article, you can learn how some companies are responding, and discover the underlying principles of this new economic world.

As we do each year, we asked Cutter’s team of experts to weigh in on some of the technologies, trends, and strategies that will truly make waves in the months to come. The resulting articles were published in Cutter Business Technology Journal.

Not every company can — or should — be digitally transformed. So before setting up an “Innovation Lab” or funding huge DT projects, do some homework and read Five Steps to Digital Transformation.